The Cost and Demographics of Vehicle Acquisition

Laura Paszkiewicz is an economist in the Branch of Information Analysis, Division of Consumer Expenditure Surveys, Bureau of Labor Statistics. Transportation costs make up a large part of a consumer’s budget. Consumer Expenditure (CE) Survey data for 2000 indicate that 88 percent of all consumer units1 either owned or leased a vehicle,2 and expenditures for leasing and purchasing (the latter defined as a net outlay) vehicles made up almost 10 percent of the average consumer unit’s total expenditures. In April 1991, the CE Survey began to ask for detailed information on the leasing of vehicles. Since that time, the incidence of leasing a vehicle increased steadily before tapering off in recent years. With the introduction of the more detailed data, it is possible to investigate the factors that contribute to a consumer’s decision to lease a vehicle, as opposed to purchasing it. The main factor contributing to this decision is the varying cost of each option. Using recent CE Survey data, this article examines the initial and monthly costs involved in leasing a vehicle, purchasing a new vehicle, and purchasing a used vehicle. The article presents details on the demographic breakdown of consumers who lease, buy new, or buy used vehicles. Methodology The sample used for this article includes all Interview survey participants from 1999 or 2000 who reported a new lease3 or purchase of a vehicle in the year in which the interview took place. (In other words, the sample consists of all participants in the 2000 Survey who leased or purchased a vehicle in 2000, as well as all participants in the 1999 Survey who leased or purchased a vehicle in 1999.) Respondents who reported using the vehicle for business, or, alternatively, receiving complete or partial payment for the vehicle by an employer are excluded from the sample. Costs involved in leasing versus buying are investigated. Average downpayments and monthly payments are compared, as are the average durations over which payments are made. The investigation further includes analyses of leasing and buying by the following demographic characteristics: Age, race, gender, income quintile, geographical region, and type of area (urban vs. rural).